How Will the Equifax Data Breach Affect Your Tax Return?

Filing your next tax return is probably the furthest thing from your mind right now. But you might want to give it at least a little attention. It’s only September, but in case you haven’t heard there was a massive data breach recently and nearly half of the entire country was likely affected.

143 Million People Potentially Affected

The breach was discovered in July but just reported earlier this month. It happened at credit bureau giant Equifax. Equifax happens to be one of the leading consumer credit reporting agencies in the country, which means the private data of as many as 143 million people might have stolen. The breach also means your information could now be available on the dark web for scammers all over the world.

What Should You Do?

It’s a scary proposition. So what can you do? Equifax has set up a website where you can check to see if your information – including your name, address, and Social Security number – were included in the hackers’ haul. So what happens next?

I’ve Likely Been Affected

I went to Equifax’s site and entered my info and got this message: “Based on the information provided, we believe that your personal information may have been impacted by this incident.” So they don’t say for sure. They “believe it may have been impacted.” And here’s an interesting side note. I entered my wife’s information and got this message: “Based on the information provided, we believe that your personal information was not impacted by this incident.”

Read the Fine Print

Yes, we have different social security numbers but our credit history is necessarily the same. It’s kind of strange that one of us may have been impacted and the other one probably not. Anyways, Equifax is offering a year of free protection, but if you sign up, then, according to the fine print, you most likely give up your right to sue Equifax.

Tax Scammers Will Be Lurking

So, back to your tax return. Why should you care about that right now? Taking a person’s identity to steal their tax refund is one of the top things hackers and scammers do when they get ahold of your information. The IRS and individual taxpayers lose millions every year to fraudulent tax returns, and it usually happens early in the tax season. That’s because hackers can’t steal your return if you’ve already filed it. Thus, the earlier you file the safer you are.

File as Early as Possible

Therefore, to guard against being the victim of tax fraud, the IRS and the Federal Trade Commission have always recommended that taxpayers file their taxes early. For the 2018 tax season that will be even more important because of the Equifax data breach. The FTC has already encouraged taxpayers to file “as soon as you have the tax information you need before a scammer can.” According to the Internal Revenue Service, tax scams are already a problem. Thousands of people lose “millions of dollars and their personal information” every year.

Be Vigilant and Diligent

The IRS is already assessing the damage, but it’s really up to you to make sure that your information is safe. If you don’t want to give up your right to be part of a lawsuit against Equifax (that could be coming at some point) by signing up for their service, then you have to be diligent and keep closely tracking your credit score and your financial accounts. You should also start planning and be preparing to file your 2017 tax return now so that you can submit that as early as possible to the IRS. Don’t let hackers get your refund before you do.